Developing global professionals
17:45, August 29, 2013 (UTC) Developing global professionals This unit looks at the broad range of work skills that the modern accountant needs. BEFORE YOU READ Discuss these questions. 1 In your country, what process do you have to go through in order to be able to work as an accountant? 2 Briefly describe any national accountancy qualifications which exist in your country. READING Understanding the main points Read the article on the opposite page and say whether these statements are true (T) or false (F). Identify the part of the article that gives this information. Correct the false ones. 1 Most accountants work for accountancy firms. 2 There are a number of different specialist areas in accounting. 3 Accountancy firms only operate in their domestic market. 4 Accountancy training is mainly organised locally. 5 With a recognised accountancy qualification, you are sufficiently trained for the rest of your working career. 6 IFAC does not expect accountants to get any further training once they have obtained their initial accountancy qualification. 7 Giving its accountants business-skills training can have a serious impact on a firms' success. Understanding details Read the article again and answer these questions. 1 Which phrase in paragraph F has the same meaning as the edge in the title? 2 What are the three main advantages of an employee who holds a recognised accountancy qualification? 3 Why do accountants generally train in their own country? 4 How does I FAC describe itself? 5 Which two broad sets of skills do large accountancy firms value as much as the purely technical accounting skills? 6 What does KPMG see as being the most important asset in its accountants? 7 Which major barrier to this does KPMG's Senior Training Manager mention? 8 Which markets would currently benefit from having more accountants trained to a high level? 9 Which attributes do employers need their internationally mobile employees to share? 10 What sort of economic benefits would a stronger accountancy profession bring to developing countries, according to ACCA's Chief Executive? Business skills give you the edge : by Rod Newing A''' Anybody can call themselves an accountant,but a recognised qualification generally guarantees proper training, experience and professional standards. 5 Most accountants work in-house for companies or organisations in the private, public or voluntary sectors. Those employed by accountancy firms, on the other hand, usually specialise in 10 very specific areas, such as auditing, taxation, insolvency or forensic accounting. Naturally, each specialism has different training requirements. '''B Despite the existence of global 15 accounting practices serving global clients, the accountancy bodies that oversee training are almost entirely domestic and serve the needs of their domestic market. C '''Although the widespread adoption of international accounting standards is making training easier, taxation is a national issue. Therefore, accountancy training naturally tends to occur at a 25 national level. 'We are not educating accountants to work anywhere in the world, but to work in their own national environment,' says Jim Sylph, Executive Director of Professional Standards 30 at the International Federation of Accountants (IFAC). '''D IFAC describes itself as 'the global organisation for the accountancy profession' . It has 2.5 million members from 35 all areas of the profession, belonging to 157 member and affiliated bodies and accountancy associations, from all over the world. E''' But accountancy training is not just 40 about the initial qualification. The big challenge is keeping accountants up to date in a changing world. To support its members, IFAC sets very broad standards for education programmes, 45 including continuing professional education and lifelong learning. '''F The current trend is to emphasise strategy and management over the purely technical subjects, because 50 strategic and managerial skills can give the big global practices a competitive advantage. G''' In this way, at Pricewaterhouse-Coopers (PwC), the concept of the 55 'business adviser' runs right through from newly qualified accountants to partners. This includes skills such as managing teams, and coaching and appraising people. Business and 60 relationship skills have huge financial implications. Indeed, they often determine the length of time that the business relationship between an accountancy firm and its customers exists. '''H '''Similarly, global training at KPMG concentrates on values, skills and behaviours. However, KPMG's main strategic focus is the mobility of its workforce, and it views the lack of TO portability of national qualifications as the main barrier to this. 'It presents challenges within the profession,' says Michael Walby, Senior Training Manager at KPMG. 'We need to be able to 75 get our resource to the opportunities, irrespective of geographical boundaries. The profession needs to work together across the various institutes to take advantage of future opportunities.' '''I 'If you get training right, it can make a significant difference to competitive advantage,' says Ms Kilbride, Associate Partner for Global Learning at Deloitte. This is especially the case in 85 small or emerging markets that are growing rapidly. They face challenges to consistency and quality because of a rapid influx of people. J '''According to Mr Blewitt, Chief 90 Executive of the Association of Chartered Certified Accountants (ACCA), increasingly employers want people who can move around the world with a common accounting language 95 and set of standards and ethics. He states, 'There is an inexhaustible demand from developing nations. With a qualified accountancy profession, these countries will continue to be able 100 to attract inward investment and aid from agencies such as the World Bank.' '''Vocabulary A Definitions Paragraph A lists four accountancy specialisms. Match these words and phrases from the article (1-4) with their meanings (a-d). 1 auditing a) when a company's financial records are officially checked because illegal activity is suspected 2 tax accounting b) an accountant working in this area acts for a person or company that is no longer able to pay their debts or a company whose liabilities exceed its assets 3 insolvency c) preparing a person's or company's financial information in order to calculate the proportion of their profit which they must pay to their government 4 forensic accounting d) checking an organisation's activities or performance or examining a person's or organisation's accounts to make sure hat they are true and honest B''' '''Word search Read paragraphs G and H again and match each of these nouns or noun phrases with either PwC or KPMG. 1 business adviser concept PwC 2 mobility 3 values and behaviours 4 team-management skills 5 coaching 6 employee appraisal 7 relationship skills C Sentence completion Use words and phrases from Exercises A and B to complete these sentences. 1 Due to a sharp drop in sales, the company was not able to pay its creditors and eventually entered into ..... 2 Accountants need to deal with clients, so it is important for them to have....... skills as well as technical ones. 3 It is important to have....... skills if you are going to be responsible for groups of employees. 4 Accountants involved in .........check that their clients' financial statements present a true and honest picture of the company. 5 The company was suspected of being dishonest in its financial reporting, so the .........accountants were called in to investigate its dealings. 6 Accountants need to develop.......... skills in order to give appropriate feedback to the teams they manage. D Word partnerships Match the sentence halves to make sentences similar to ones in the article. 1 Global accounting practices serve 2 A recognised qualification guarantees 3 Accountancy bodies that oversee training serve 4 IFAC provides 5 Good training can make 6 Emerging markets face a) a wide range of education programmes. b) a significant difference to competitive advantage. c) global clients. d) challenges to consistency and quality. e) proper training. f) the needs of their domestic market. E Linking ideas 1 Find five words or phrases in the article which express contrast or similarity. Identify the sentences in which they appear and state which idea they express. EXAMPLE: Anybody can call themseves an accountant but a recognised qualitication generally guarantees' proper training; experience and professional standards'. (lines 1-5) 'But' expresses' contrast. 2 Write five sentences of your own, using the linking words and phrases you found in Exercise 1. F Understanding expressions Choose the best explanation for each phrase from the article. 1 '... not just about the initial qualification/ (lines 39-40) a) occurring at the end b) occurring at the beginning 2 '... have huge financial implications.' (lines 60-61) a) consequences b) difficulties 3. ' There is an inexhaustible demand ...' (lines 96-97) a) never-ending b) enormous Over to you 1. Do an Internet search of the accountancy firms mentioned in the article. Which areas of professional training do they provide, and which firm looks the most interesting to work for? Write a short report. 2. Vocabulary Exercise B lists several non-technical aspects of accountancy work. Explain what they might involve and whether you think they make the job more interesting. 3. Which of the accountancy specialisms mentioned in the article do you think would be the most interesting to work in? Explain your ideas in a short presentation. ______________________________________________________________________________________________ Translate the article, complete the tasks and be ready to speak on the topic. Don't forget that speakers were appointed at the seminar. '' =Anatomy of a Meltdown= = Part 1 = = Abridged version= Ben Bernanke and the financial crisis. by John Cassidy December 1, 2008 Bernanke says that he was “mistaken early on in saying that the subprime crisis would be contained.” Some are born radical. Some are made radical. And some have radicalism thrust upon them. That is the way with Ben Bernanke, as he struggles to rescue the American financial system from collapse. Early every morning, weekends included, Bernanke arrives at the headquarters of the Federal Reserve, an austere white marble pile on Constitution Avenue in Foggy Bottom. The office occupied by Bernanke, a soft-spoken fifty-four-year-old former professor, has high ceilings, several shelves of economics textbooks, and, on the desk, a black Bloomberg terminal. At Princeton, where Bernanke taught economics for many years, he was known for his retiring manner and his statistics-laden research on the Great Depression. For more than a year after he was appointed by President George W. Bush to chair the Fed, in February, 2006, he faithfully upheld the policies of his immediate predecessor, the charismatic free-market conservative Alan Greenspan, and he adhered to the central bank’s formal mandates: controlling inflation and maintaining employment. But since the market for subprime mortgages collapsed, in the summer of 2007, the growing financial crisis has forced Bernanke to intervene on Wall Street in ways never before contemplated by the Fed. He has slashed interest rates, established new lending programs, extended hundreds of billions of dollars to troubled financial firms, bought debt issued by industrial corporations such as General Electric, and even taken distressed mortgage assets onto the Fed’s books. These moves hardly amount to a Marxist revolution, but, in the eyes of many economists, including supporters and opponents of the measures, they represent a watershed in American economic and political history. Ben Bernanke, who seemed to have been selected as much for his predictability as for his economic expertise, is now engaged in the boldest use of the Fed’s authority since its inception, in 1913. Bernanke, working closely with Henry (Hank) Paulson, the Treasury Secretary, a voluble former investment banker, was determined to keep the financial sector operating long enough so that it could repair itself—a policy that he and his Fed colleagues referred to as the “finger-in-the-dike” strategy. He believed that the strategy was working. The credit markets remained open; the economy was still expanding. By mid-September, however, the outlook was much grimmer. On Monday, September 15th, Lehman Brothers, another Wall Street investment bank that had made bad bets on subprime mortgage securities, filed for bankruptcy protection, after Bernanke, Paulson, and the bank’s senior executives failed to find a way to save it or to sell it to a healthier firm. During the next forty-eight hours, the Dow Jones Industrial Average fell nearly four hundred points; Bank of America announced its purchase of Merrill Lynch; and American International Group, the country’s biggest insurance company, began talks with the New York Fed about a possible rescue. Goldman Sachs and Morgan Stanley, the two wealthiest investment banks on Wall Street, were also in trouble. The Fed talked with Wall Street executives about creating a “lifeline” for Goldman Sachs and Morgan Stanley, which would have given the firms greater access to central-bank funds. But Bernanke decided that even more drastic action was needed. On Wednesday, September 17th, a day after the Fed agreed to inject eighty-five billion dollars of taxpayers’ money into A.I.G., Bernanke asked Paulson to accompany him to Capitol Hill and make the case for a congressional bailout of the entire banking industry Paulson agreed. A bailout ran counter to the Bush Administration’s free-market principles and to his own belief that reckless behavior should not be rewarded, but he had worked on Wall Street for thirty-two years, most recently as the C.E.O. of Goldman Sachs, and had never seen a financial crisis of this magnitude. The most serious charge against Bernanke and Paulson is that their response to the crisis has been ad hoc and contradictory: they rescued Bear Stearns but allowed Lehman Brothers to fail; for months, they dismissed the danger from the subprime crisis and then suddenly announced that it was grave enough to justify a huge bailout; they said they needed seven hundred billion dollars to buy up distressed mortgage securities and then, in October, used the money to purchase stock in banks instead. Bernanke and Paulson’s reversals have been deeply unsettling, perhaps especially so for the millions of Americans who have lost jobs or defaulted on mortgages so far this year. And yet, for the past year and a half, the government has confronted a financial debacle of unprecedented size and complexity. Six and a half years ago, Bernanke was a little-known professor living in Montgomery Township, a hamlet near Princeton. As Fed chairman, Bernanke inherited an unprecedented housing bubble and an unsustainable borrowing spree. The collapse of these phenomena occurred with astonishing speed and violence. The only precursor for the current financial crisis is the Great Depression, but even that isn’t a very good comparison. In the nineteen-thirties, the financial system was much less sophisticated and interconnected. In dealing with problems affecting arcane new financial products, including “collateralized debt obligations,” “credit default swaps,” and “tri-party repos,” Bernanke and his colleagues have had to become expert in market transactions of baffling intricacy. Bernanke grew up in Dillon, South Carolina, an agricultural town just across the state line from North Carolina, where, in 1941, his paternal grandfather, Jonas Bernanke, a Jewish immigrant from Austria, founded the Jay Bee Drugstore, subsequently operated by Ben’s father and an uncle. The eldest of three siblings, Bernanke learned to read in kindergarten and skipped first grade. When he was eleven, he won the state spelling championship. In high school, Bernanke taught himself calculus, submitted eleven entries to a state poetry contest, and played alto saxophone in the marching band. During his junior year, he scored 1590 out of 1600 on his S.A.T.s—the highest score in South Carolina that year—and the state awarded him a trip to Europe. In the fall of 1971, he entered Harvard, where he wrote a prize-winning senior thesis on the economic effects of U.S. energy policy. After graduating, he enrolled at M.I.T., whose Ph.D. program in economics was rated the best in the country. His doctoral thesis was a dense mathematical treatise on the causes of economic fluctuations. He accepted a job at the Stanford Graduate School of Business, where Anna Friedmann, a Wellesley senior whom Bernanke married the weekend after she graduated, had been admitted into the master’s program in Spanish. The couple lived in Northern California for six years, until Princeton awarded Bernanke, then just thirty-one, a tenured position. Settling in Montgomery Township, they brought up two children. In 1996, Bernanke became chairman of the Princeton economics department, a job many professors regard as a dull administrative diversion from their real work. Bernanke, however, embraced the chairmanship, staying on for two three-year terms. Under his stewardship, the department launched new programs and hired leading scholars, among them Paul Krugman, whom Bernanke wooed personally. The other event that changed Bernanke’s career occurred in the summer of 1999, at the height of the Internet stock boom, when he and Gertler were invited to present a paper at an annual policy conference organized by the Federal Reserve Bank of Kansas City. The topic of the conference—which takes place at a resort in Jackson Hole, Wyoming—was New Challenges for Monetary Policy. Then, as now, there was vigorous debate among economists about whether central banks should raise interest rates to counter speculative bubbles Bernanke and Gertler argued that the Fed should ignore bubbles and stick to its traditional policy of controlling inflation. If a bubble inflated and burst of its own accord, they said, the Fed could always bring down rates to alleviate damage to the broader economy. To support their case, they presented a series of computer simulations, which appeared to show that a policy of targeting inflation stabilized the economy more effectively than one that targeted bubbles. The presentation got a mixed reception. Henry Kaufman, a well-known Wall Street economist, said that it would be irresponsible for the Fed to ignore rampant speculation. Rudi Dornbusch, an M.I.T. professor (who has since died), pointed out that Bernanke and Gertler had overlooked the possibility that credit could dry up after a bubble burst, and that such a development could have serious effects on the economy. But Greenspan was more supportive. “He didn’t say anything during the session,” Gertler recalled. “But after it was over he walked by and said, as quietly as he could, ‘You know, I agree with you.’ That had us in seventh heaven.” In December, 1996, Greenspan had warned that investors could fall victim to “irrational exuberance.” Subsequently, though, he had adopted a policy of benign neglect toward the stock market, ignoring warnings that a bubble in technology and Internet stocks had developed. The paper by Bernanke and Gertler provided theoretical support for Greenspan’s stance, and it received a good deal of publicity. In 2002, when the Bush Administration was looking to fill two vacant governorships at the Fed—there are seven in all—Glenn Hubbard, who is the dean of Columbia Business School and who was then the chairman of the White House Council of Economic Advisers, proposed Bernanke. “We needed a strong economist who understood the financial markets, and Ben had expertise in that area,” Hubbard recalled. “He is also an extremely nice person. In terms of getting on with people, he is very affable, and I thought that would help him, too.” '''LEXIS: Anatomy of a Meltdown' WORD STUDY Explore the article and do the following tasks: '''''1) Match the words having similar meanings: '' 2) Match the words to produce the proper collocations:'' 3) Provide in-depth, thoughtful answers to the following questions: 1 What first steps as Chair did Ben Bernanke take? 2 What was the situation like in September 2007? 3 What drastic actions did Bernanke take while the crisis was unfolding to prevent it? 4 What was the economic situation like when Bernanke took office? 5 What were Bernanke`s achievements in adolescence? What are important facts from his biography? 6 Why do actions taken by Bernanke to head off/avert the crisis represent a watershed in American economic and political history? 7 Comment on the phrase, “…Bernanke is now engaged in the boldest use of the Fed`s authority since its inception, in 1913.” 8 What are the charges against Bernanke & Paulson`s actions to alleviate the critical situation? 9 What were the events that changed Bernanke`s career? ______________________________________________________________________________________________ _____________________________________________________________________________________________ Please, print out Unit 2 and bring it to the class. _________________________________________________________________________________________ Anatomy of the Meltdown Part 2 ' Abridged version' When Bernanke joined the Fed, it was struggling to revive the economy after the Nasdaq collapse of 2000-01 and the terrorist attacks of September 11, 2001. Between September, 2001, and June, 2003, Greenspan and his colleagues cut the federal funds rate—the key interest rate under the Fed’s control—from 3.5 per cent to one per cent, its lowest level since the nineteen-fifties. Cutting interest rates during an economic downturn is standard policy at the Fed; lower borrowing costs encourage households and businesses to spend more. But Greenspan’s rate reductions were unusual in both their scale and their longevity. With cheap financing readily available, a housing boom developed. Families bought homes they couldn’t have afforded at higher interest rates; speculators bought properties to flip; people with modest incomes or poor credit took out mortgages designed for marginal buyers, such as subprime loans, interest-only loans, and “Alt-A” loans. On Wall Street, a huge market evolved in subprime mortgage bonds—securities backed by payment streams from dozens or hundreds of individual subprime mortgages. As house prices soared, many Americans took out home-equity loans to finance their spending. The personal savings rate dipped below zero, and the trade deficit, which the United States financed by borrowing heavily from abroad, expanded greatly. Some experts warned that the economy was on an unsustainable course; Bernanke disagreed. In a much discussed speech in March, 2005, he argued that the main source of imbalance in the global economy was not excess spending at home but, rather, excess saving in China and other developing countries, where consumption was artificially low. Lax American policy was helping to mop up a “global savings glut.” “Bernanke provided the intellectual justification for the Fed’s hands-off approach to asset bubbles,” Stephen S. Roach, the chairman of Morgan Stanley Asia, who was among the economists urging the Fed to adjust its policy, told me. “He also played a key role in the development of the ‘global savings glut’ theory, which the Fed used as a very convenient excuse to say we are doing the world a big favor in maintaining demand. In retrospect, we didn’t have a global savings glut—we had an American consumption glut. In both of those cases, Bernanke was complicit in massive policy blunders on the part of the Fed.” ' ' Between 2004 and 2007, White and his colleagues continued to warn about the global credit boom, but they were largely ignored in the United States. “In the field of economics, American academics have such a large reputation that they sweep all before them,” White said. “If you add to that the personal reputation of the Maestro”—Greenspan—“it was very difficult for anybody else to come in and say there are problems building.” After years of theorizing about the economy, Bernanke revelled in the opportunity to participate in policy decisions, though he rarely challenged Greenspan. From the moment Bernanke went to work for Bush, he was seen as a likely successor to Greenspan, who was due to retire in January, 2006. On October 24, 2005, President Bush nominated Bernanke as the fourteenth chairman of the Fed, saying, “He commands deep respect in the global financial community.” After thanking the President, Bernanke said that if the Senate confirmed him his first priority would be “to maintain continuity with the policies and policy strategies established during the Greenspan years.” For more than a year, Bernanke kept his word. In the first half of 2006, the F.O.M.C. raised the federal funds rate in three quarter-point increments, to 5.25 per cent, and kept it there for the rest of the year. But cheap money was only part of Greenspan’s legacy. He had also championed financial deregulation, resisting calls for tighter government oversight of burgeoning financial products, such as over-the-counter derivatives, and applauded the growth of subprime mortgages. Bernanke hadn’t said much about regulation before being nominated as the Fed chairman. Once in office, he generally adhered to Greenspan’s laissez-faire approach. In May, 2006, he rejected calls for direct regulation of hedge funds, saying that such a move would “stifle innovation.” The following month, in a speech on bank supervision, he expressed support for allowing banks, rather than government officials, to determine how much risk they could take on, using complicated mathematical models of their own devising—a policy that had been in place for a number of years. It is now evident that self-regulation failed. By extending mortgages to unqualified lenders and accumulating large inventories of subprime securities, banks and other financial institutions took on enormous risks, often without realizing it. Their mathematical models failed to alert them to potential perils. Bernanke was more concerned about inflation and unemployment, the Fed’s traditional areas of focus, than he was about the growth of mortgage securities. “The U.S. economy appears to be making a transition from the rapid rate of expansion experienced over the preceding years to a more sustainable, average pace of growth,” he told the Senate banking committee in February, 2007. By then, home prices in many parts of the country had begun to drop. At least two prominent economists—Nouriel Roubini, at N.Y.U., and Joseph Stiglitz, at Columbia—had warned that a nationwide housing slump could trigger a recession, but Bernanke and his colleagues thought this was unlikely. On February 28, 2007, Bernanke told the House budget committee that he didn’t consider the housing downturn “as being a broad financial concern or a major factor in assessing the state of the economy.” He maintained an upbeat tone over the next several months, during which two large subprime lenders, New Century Financial Corp. and American Home Mortgage, filed for bankruptcy, and the damage spread to Wall Street firms that had invested in subprime securities. On August 9, 2007, the crisis escalated significantly after BNP Paribas, a major French bank, temporarily suspended withdrawals from three of its investment funds that had holdings of subprime securities, citing a “complete evaporation of liquidity in certain market segments of the U.S. securitization market.” In other words, trading in the mortgage securities market had ceased, leaving many financial institutions short of cash and saddled with assets that they couldn’t sell at any price. Stocks fell sharply on both sides of the Atlantic, and the following day Bernanke held a conference call with members of the F.O.M.C., during which they discussed reducing the interest rate at which the Fed lends to commercial banks—the “discount rate.” Since the Fed was founded, it has had a “discount window,” from which commercial banks may borrow as needed. The Fed decided to keep the discount rate at 6.25 per cent but issued a statement reminding banks that the discount window was open if they needed money. Seven days later, however, after more wild swings in the markets, the Fed voted to cut the discount rate by half a point, to 5.75 per cent. Bernanke now realized that the subprime crisis posed a grave threat to some of the country’s biggest financial institutions and that Greenspan-era policies were insufficient to contain it. In the third week of August, he made his second visit as head of the Fed to Jackson Hole, where he invited some of his senior colleagues to join him in a brainstorming session. “What’s going on and what do we need to do?” he asked. “What tools have we got and what tools do we need?” The participants included Don Kohn; Kevin Warsh; Brian Madigan, the head of monetary affairs at the Fed; Tim Geithner, the head of the New York Fed; and Bill Dudley, who runs the markets desk at the New York Fed. The men agreed that the financial system was facing what is known as a “liquidity crisis.” Banks, fearful of lending money to financial institutions that might turn out to be in trouble, were starting to hoard their capital. If this situation persisted, businesses and consumers might be unable to obtain the loans they needed in order to spend money and keep the economy afloat. Bernanke and his colleagues settled on a two-part approach to the crisis. (Geithner later dubbed it “the Bernanke doctrine.”) First, to prevent the economy from stalling, the Fed would lower the federal funds rate modestly—by half a point in September and by a quarter point in October, to 4.5 per cent. This was standard Fed policy—trimming rates to head off an economic decline—but it didn’t directly address the crisis of confidence afflicting the financial system. WORD STUDY Part 2 Explore the article and do the following tasks: 1) Match the words having similar meanings: '' 2) Match the words to produce the proper collocations:'' 3) Provide in-depth, thoughtful answers to the following questions: 1 What was the economic situation like when Bernanke joined the Fed? 2 What was the main source of imbalance in the economy according to B.Bernanke? 3 What policy did Bernanke pursue to keep the economy afloat? 4 What blunders did Bernanke commit according to the experts dissented from the Greenspan-Bernanke line? 5 Did Bernanke keep his word to maintain continuity with the policies established during the Greenspan years? 6 What were the key focuses and results of financial policy pursued by Bernanke`s predecessor Alan Greenspan? 7 Why did self-regulation fail? 8 What was Bernanke`s attitude towards the housing downturn in 2007? Did he realize then the scale of this problem? Why?/Why not? 9 What is “liquidity crisis” characterized by and what are its repercussions? International Financial Reporting Standards 'Unit 3' The unit looks at the set of international accounting and reporting rules which is being adopted by a large number of countries. Please, print out the text. Anatomy of a meltdown Part 3 ' ' Abridged version Although many people at the Fed worked on the details of the lending programs, Bernanke provided the impetus for their development. One of his first acts on taking office was to establish a financial-stability working group, which brought together economists, finance specialists, bank supervisors, and lawyers from different departments at the Fed to devise solutions to potential problems. As the subprime crisis unfolded, Bernanke met with the task force frequently to discuss the Fed’s response, including how, in seeking to expand the scope of its activities, it could exploit obscure laws from the nineteen-thirties. Despite the rate cuts and lending programs, months passed without discernible improvements in the credit markets. During the summer and fall of 2007, the drop in house prices accelerated and the number of subprime delinquencies increased. In October, at a meeting in Washington of central bankers, executives, and economists, Allen Sinai, the chief economist at Decision Economics, Inc., asked Bernanke how he thought a central bank should manage the economic risks posed by a housing bubble. According to Sinai, Bernanke said that he had no way of knowing if there had been a housing bubble. “I realized then that he just didn’t realize the scale of the problem,” Sinai told me. By the end of 2007, however, Bernanke was beginning to agree with some of the Fed’s critics that interest rates needed to come down quickly. On January 4, 2008, the Labor Department reported that the unemployment rate had jumped from 4.7 per cent to five per cent, prompting a number of economists to say that the United States was on the brink of a recession. More banks and investment banks, including Citigroup, UBS, and Morgan Stanley, were reporting big losses. Bernanke was frustrated by the attacks on his policies, especially when they came from academics whose work he respected. If he moved slowly, people on Wall Street accused him of timidity. If he brought rates down sharply, academic economists accused him of going soft on inflation. As the financial crisis worsened, Bernanke worked more closely with Paulson, who, after becoming Treasury Secretary, in June, 2006, had established considerable autonomy in determining the Bush Administration’s economic policy. The men appeared to have little in common. Bernanke was scholarly and reserved; Paulson was gregarious. Both, however, were political moderates who liked baseball. In early March, 2008, stock in Bear Stearns, the investment bank and a major underwriter of subprime securities, fell steeply amid rumors that the firm was having trouble raising money in the overnight markets, on which, like all Wall Street firms, it depended to finance its huge trading positions. Many of the bank’s clients began to withdraw their money, and many of its creditors demanded more collateral for their loans. In accommodating these requests, Bear was forced to draw on its cash reserves. By the afternoon of Thursday, March 13th, it reportedly had just two billion dollars left, not nearly enough to meet its obligations on Friday morning. The Bernanke doctrine hadn’t been designed to deal with such a situation. When Bernanke and Tim Geithner, the Fed’s point man on Wall Street, first learned of Bear’s predicament, they believed that the bank should be allowed to fail. For decades, the Fed had resisted lending to Wall Street firms for fear that it would encourage them to take excessive risks—a concern that economists refer to as “moral hazard.” (The discount window is confined to commercial banks.) Bear wasn’t one of Wall Street’s biggest firms, and its demise seemed unlikely to lead to other failures. By late Thursday night, after officials from the New York Fed and the S.E.C. visited Bear’s offices to review its books, the assessment had changed. The company was a major participant in the “repurchase”—or “repo”—market, a little publicized but vitally important market in which banks raise cash on a short-term basis from mutual funds, hedge funds, insurance companies, and central banks. Every night, about $2.5 trillion turns over in the repo market. Bear was also a big dealer in credit-default swaps (C.D.S.s), which are basically insurance contracts on bonds. If the bank were to default before the markets opened on Friday, the effect on the repo and swaps markets would be chaotic. At two o’clock that morning, Geithner called Don Kohn and told him that he wasn’t confident that the fallout from the bankruptcy of Bear Stearns could be contained. At about 4 A.M., Geithner spoke to Bernanke, who agreed that the Fed should intervene. The central bank decided to extend a twenty-eight-day loan to J. P. Morgan, Bear’s clearing bank, which would pass the money on to Bear. In agreeing to make the loan, Bernanke relied on Section 13(3) of the Federal Reserve Act of 1932, which empowered the Fed to extend credit to financial institutions other than banks in “unusual and exigent circumstances.” News of the Fed’s loan got Bear through trading on Friday, but Bernanke and Paulson were eager to find a permanent solution before the Asian markets opened on Sunday night. After a weekend of torturous negotiations, J. P. Morgan agreed to buy Bear Stearns for a knockdown price of two dollars a share, but only after the Fed agreed to take on Bear’s twenty-nine-billion-dollar portfolio of subprime securities. The day the Federal Reserve announced the rescue of Bear Stearns, it also cut the discount rate by another quarter point, and said that for a time it would open the discount window to twenty Wall Street firms—an unprecedented step. Fed officials felt they had little choice but to let investment banks borrow from the Fed on the same terms as commercial banks, even if it encouraged moral hazard. There is now wide agreement that Bernanke and his colleagues made the correct decision about Bear Stearns. If they had allowed the firm to file for bankruptcy, the financial panic that developed this fall would almost certainly have begun six months earlier. Instead, the markets settled for a while. Nevertheless, after Bear Stearns’s deal with J. P. Morgan was announced, Bernanke was attacked—by the media, by conservative economists, even by former Fed officials. Some of the criticisms were unfair. In fact, it quickly became clear that an important precedent had been set: the Bernanke doctrine now included preventing the failure of major financial institutions. Since the collapse of the mortgage-securities market on Wall Street, in the summer of 2007, mortgage securitization had been left mainly in the hands of two companies that operated under government charters to encourage home-ownership: the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Like the Wall Street firms, Fannie and Freddie had suffered big losses on their vast loan portfolios, and many Wall Street analysts believed that the companies were on the verge of insolvency—an alarming prospect for the U.S. government. In order to finance their purchases of mortgages and mortgage bonds, Fannie and Freddie had issued $5.2 trillion in debt, and although they were technically private companies, their debt traded as if the government had guaranteed it. If the companies defaulted, the creditworthiness of the entire government would be called into question. The plan to prop up Freddie and Fannie was no more warmly received than the Bear Stearns rescue package had been. Bernanke couldn’t say so publicly, but he agreed with some of the critics. For years, the Fed had warned that Fannie and Freddie were squeezing out competitors and engaging in risky mortgage-lending practices. Bernanke would have liked to combine a rescue package with extensive reforms, but he realized that an overhaul of the companies was not politically feasible. Despite their financial problems, Fannie and Freddie still had many powerful allies in Congress, and Bernanke was determined that the plan be approved quickly, in order to restore confidence in the markets. WORD STUDY Explore the article and do the following tasks: 1) ''Match the words having similar meanings:'' '' '' 2) Match the words to produce the proper collocations:'' ''3) Provide in-depth, thoughtful answers to the following questions:'' 1. In what way did Paulson differ from Bernanke? What were their relations? 2. Why did the Fed intervene to rescue Bear Stearns? Was it the right decision? 3. What is “moral hazard”? 4. What is the ‘repo” market? 5. Why was Bernanke so fiercely attacked after bailing out Bear Stearns? 6. Why was it so important for the US government to support such private companies as Freddie Mac and Fannie Mae? 7. Was the Fed`s plan to prop up Freddie Mac and Fannie Mae warmly received by experts? Why? '''Anatomy of a Meltdown ' Part 4 ' On August 21st, Bernanke departed for the annual Jackson Hole conference, which was to be devoted to the credit crunch. Over the course of three days, one speaker after another challenged aspects of the Fed’s response, and, implicitly, of Bernanke’s leadership. Allan Meltzer, of Carnegie Mellon, complained that the Fed had adopted an ad-hoc approach to bailing out troubled firms. Franklin Allen, a professor at the Wharton School, said that banks and investment firms could use the Fed’s lending facilities as a means of concealing the state of their finances, and Willem Buiter, of the London School of Economics, accused the Fed of doing the financial industry’s bidding, saying that the central bank had “internalized the fears, beliefs, and world views of Wall Street” and fallen victim to “cognitive regulatory capture.” Alan Blinder, Bernanke’s friend and colleague from Princeton, defended him, arguing that the Fed had performed well in trying circumstances, and Martin Feldstein, a Harvard economist, said that it had “responded appropriately this year.” But Feldstein added that the financial crisis was getting worse as housing prices continued to drop and homeowners to default. Perhaps the most suggestive comments were made by Yutaka Yamaguchi, a former deputy governor of the Bank of Japan, who, during the nineties, helped manage Japan’s response to a ruinous speculative bust. The Bank of Japan began cutting interest rates in July, 1991, Yamaguchi recalled, but the financial system didn’t stabilize until after the Japanese government bailed out a number of banks, a project that took almost a decade. The main lesson of the Japanese experience, he said, was the need for an “early and large-scale recapitalization of the financial system,” using public money. Throughout the discussion, Bernanke sat quietly and listened. He looked exhausted, and during one presentation he appeared to fall asleep. In his own speech, he defended the Fed’s actions and argued that in the future the agency should be given more power to supervise big financial firms and opaque markets such as the repo market, and that a legal framework should be established to allow the government to intervene when they got into trouble. The speech suggested that Bernanke had adopted a more favorable view of regulation, but he made no mention of using monetary policy to deflate speculative bubbles or of recapitalizing the banking system. Bernanke still believed that his finger-in-the-dike strategy was working. After all, in the second quarter of the year the Gross Domestic Product had expanded at an annualized rate of almost three per cent—and the unemployment rate was under six per cent. Commodity prices, including oil prices, had started to fall, which would ease inflation pressures. In Washington, over Labor Day weekend, Bernanke and Paulson met to discuss Fannie and Freddie. In the five weeks since Congress had given the Bush Administration broad authority to invest in the companies, the firms had tried unsuccessfully to raise capital on their own. Paulson and Bernanke decided that a government takeover was now the best option. In addition to removing the threat that Fannie and Freddie would default on their debts, it would enable the government to expand their lending activities and help stabilize house prices. On Sunday, September 7th, Paulson announced that the government would place Fannie and Freddie in a “conservatorship,” replacing their chief executives, taking an eighty-per-cent ownership stake in each of the companies, and providing them with access to as much as two hundred billion dollars in capital. The next day, the Dow closed up almost three hundred points. The billionaire Warren Buffett, whom Paulson had briefed on the move, said that it represented “exactly the right decision for the country.” Even the Wall Street Journal’s editorial page, which for months had criticized Paulson and Bernanke, grudgingly endorsed the plan. At the Treasury Department and the Fed, there was little opportunity to celebrate. On Tuesday, September 9th, stock in Lehman Brothers dropped by forty-five per cent, following reports that it had failed to secure billions of dollars in capital from a Korean bank. Lehman approached several potential buyers, including Bank of America and Barclays, the British bank. But by the end of the week it was running out of cash. On Friday evening, Geithner and Paulson summoned a group of senior Wall Street executives to the New York Fed and told them that the government wanted an “industry” solution to Lehman’s problems. Talks continued through the weekend, but by Sunday afternoon both Bank of America and Barclays had bowed out, and word circulated that Lehman was preparing to file for bankruptcy. Remarkably, once the potential bidders dropped out, Bernanke and Paulson never seriously considered mounting a government rescue of Lehman Brothers. Bernanke and other Fed officials say that they lacked the legal authority to save the bank. “There was no mechanism, there was no option, there was no set of rules, there was no funding to allow us to address that situation,” Bernanke said last month, at the Economic Club of New York. However, Bernanke and Paulson were undoubtedly sensitive to the charge, made in the wake of their efforts to salvage Bear Stearns, Fannie Mae, and Freddie Mac, that they were bailing out greedy and irresponsible financiers. For months, the Treasury and the Fed had urged Lehman’s senior executives to raise more capital, which the bank had failed to do. Many analysts remain skeptical that the Fed couldn’t have rescued Lehman. At the time, a popular interpretation of Lehman Brothers’ demise was that Bernanke and Paulson had finally drawn a line in the sand. (“We’ve reestablished ‘moral hazard,’ ” a source involved in the Lehman discussions told the Wall Street Journal.) But less than forty-eight hours later the Fed agreed to extend up to eighty-five billion dollars to A.I.G., a firm that had possibly acted even more irresponsibly. One difference was that the Fed, in charging A.I.G. an interest rate of more than ten per cent and demanding up to eighty per cent of the company’s equity, had been able to impose tough terms in exchange for its support. More important, A.I.G. was a much bigger and more complex firm than Lehman Brothers was. In addition to providing life insurance and homeowners’ policies, it was a major insurer of mortgage bonds and other types of securities. If it had been allowed to default, every big financial firm in the country, and many others abroad, would have been adversely affected. But even the announcement of A.I.G.’s rescue wasn’t enough to calm the markets. On Tuesday, September 16th, the Reserve Primary Fund, a New York-based money-market mutual fund that had bought more than seven hundred million dollars in short-term debt issued by Lehman Brothers, announced that it was suspending redemptions because its net asset value had fallen below a dollar a share. The subprime virus was infecting parts of the financial system that had appeared immune to it—including the most risk-averse institutions. Bernanke accompanied Paulson to Capitol Hill to warn reluctant congressmen about the catastrophic consequences of failing to pass a bailout bill. (“When you listened to him describe it, you gulped,” Senator Chuck Schumer, the New York Democrat, said of Bernanke’s evocation of the crisis. Often, it was clear that Bernanke and Paulson were improvising. On November 10th, the Fed and the Treasury Department announced that they would provide more money to A.I.G., raising the total amount of public funds committed to the company to a hundred and fifty billion dollars. (The Fed’s original eighty-five-billion-dollar loan, and a subsequent one, of $37.8 billion, had proved inadequate.) Two days later, Paulson abandoned the idea of buying up distressed mortgage securities—a proposal that he and Bernanke had vigorously defended—and last week, at a hearing of the House Financial Services Committee, congressmen excoriated him.. The Congressman had a point. Paulson’s and Bernanke’s efforts to prop up the financial system have so far had little effect on the housing slump, which is the source of the trouble. Until that problem is addressed, the financial sector will remain under great stress. Last week, the stock market plunged to its lowest level in eleven years, auto executives flew into Washington on their corporate jets to demand a bailout, and Wall Street analysts warned that the political vacuum between Administrations could create more turmoil. “We can’t get from here to February 1st if the current ‘who’s in charge?’ situation continues,” Robert Barbera, the chief economist at I.T.G., an investment firm, told the Times. Bernanke, though, remains remarkably calm. (Jim Cramer would say oblivious.) He is unapologetic about the alterations to the bailout plan, arguing that changing circumstances demanded them, and he is relieved that the Treasury Department and Congress are now leading the government’s response to the crisis. Despite grim news on unemployment, retail sales, and corporate earnings, he is hopeful that an economic recovery will begin sometime next year. Until the middle of last week, there were signs that the credit crisis was easing: some banks were lending to each other again, the interest rates that they charge each other have come down, and no major financial institution has failed since the passage of the bailout bill. “It was a very important step,” Bernanke told me last week, referring to the bailout. “It greatly diminished the threat of a global financial meltdown. But, as Hank Paulson said publicly, ‘you don’t get much credit for averting a disaster.’ ” On Wall Street, Bernanke’s reviews have improved, especially at firms that have received assistance from the Fed. “I think he has done a superb job, both in coming up with innovative solutions and in coördinating the policy response with the New York Fed, the Treasury Department, and the S.E.C.,” John Mack, of Morgan Stanley, told me. “I give him very high marks.” George Soros, the investor and philanthropist, whose firm has not benefitted from the Fed’s largesse, said, “Early on, being an academic, he didn’t realize the seriousness of the problem. But after the start of the year he got the message and he acted very decisively.” Still, Soros went on, citing renewed turbulence in the markets and speculation about the fate of Citigroup, whose stock price last Friday fell below four dollars, the crisis is far from over. “With Lehman, the system effectively broke down. It is now on life support from the Fed, but it’s really touch and go whether they can hold it together. The pressure is mounting even as we speak.” He added, “We may be on the verge of another collapse.” Bernanke, in a search for inspiration and guidance, has been thinking about two Presidents: Franklin Delano Roosevelt and Abraham Lincoln. From the former he took the notion that what policymakers needed in a crisis was flexibility and resolve. After assuming office, in March, 1933, Roosevelt enacted bold measures aimed at reviving the moribund economy: a banking holiday, deposit insurance, expanded public works, a devaluation of the dollar, price controls, the imposition of production directives on many industries. Some of the measures worked; some may have delayed a rebound. But they gave the American people hope, because they were decisive actions. Bernanke’s knowledge of Lincoln was more limited, but one morning the man who organizes the parking pool in the basement of the Fed’s headquarters had given him a copy of a statement Lincoln made in 1862, after he was criticized by Congress for military blunders during the Civil War: “If I were to try to read, much less answer, all the attacks made on me, this shop might as well be closed for any other business. I do the very best I know how—the very best I can; and I mean to keep doing so until the end. If the end brings me out all right, what is said against me won’t amount to anything. If the end brings me out wrong, ten angels swearing I was right will make no difference.” Bernanke keeps the statement on his desk, so he can refer to it when necessary. ♦ A List of Vocabulary WORD STUDY Part 4 Explore the article Part 4 and do the following tasks: 1) Match the words having similar meanings: '' 2) Match the words to produce the proper collocations:'' '' '' 3) Provide in-depth, thoughtful answers to the following questions: 1. What accusations were brought against the Fed at the annual Jackson Hole conference? 2. What are the signs of successful implementation of Bernanke`s strategy of a government takeover? 3. Why did the Fed fail to step in to rescue Lehman Brothers, but agreed to extend $85billon to A.I.G.? 4. What does Hank Pauson`s phrase, “you don`t get much credit for averting a disaster” imply? 5. Who inspires and provides guidance for Bernanke? 6. Find in this articles relevant phrases, pertinent collocations, statements charactering Ben Bernanke. 'Interview with Ben Bernanke' Watch an interview with Bernanke:'' ' http://www.cbsnews.com/video/watch/?id=5069647n _ http://www.cbsnews.com/video/watch/?id=5069647n ''Complete the tasks: '' '' 'Part 1 ''' ''Pre-viewing ' Language input' While viewing 1) Match the words (1-12) with their synonyms or explanations (A-L): 2) Match the words to produce the proper collocations: '' '' After viewing Discuss the following questions: 1 What signs of recovery will be visible in the near future according to Ben Bernanke? 2 What is necessary to be done to curb the unemployment rate? 3 What is Bernanke`s critical judgement about not rescuing Lehman Brothers? 4 Why did he act so generously with regard to AIG? 5 Why did the Fed fail to lead America out of the recession in 1929 and instead turn it into a global calamity? 6 What is stress test intended for? ''' Interview with Ben Bernanke' ______________________________________________________________________________________________ ' 'Part 2''' '''''Watch the second part of the video: Pre-viewing ' Language input' ' ' While viewing 1) Match the words (1-12) with their synonyms or explanations (A-L): 2) Match the words to produce the proper collocations: After viewing Discuss the following questions: 1 What makes Bernanke as Chair of the Fed different from his predecessors? 2 What is Bernanke`s background? Explain his statement, “I come from Main Street”. 3 What are the key functions of the Fed? 4 What explanation does Bernanke provide for the things that befell the US financial system? 5 What steps does the Fed take to avert another crisis? 6 What favorable impact on the US financial system have the efforts of the Fed had? ______________________________________________________________________________________________ =Ben Bernanke: The Controversial Chairman of the Federal Reserve= Why was Bernanke Named Time Magazine's Person of the Year? By Rosemary Peavler, About.com Guide Ben Bernanke fschlosser Sponsored Links Right after Ben Bernanke was named Time's Person of the Year for 2009, he was up for confirmation hearings for a new four-year term as Chairman of the Federal Reserve. The confirmation hearings were contentious. Many didn't want Bernanke to serve another term. Some blamed him for the Wall Street meltdown in the fall of 2008. Some blamed him for not seeing the Great Recession coming. Some even went so far as to think he was in on the whole thing with the investment bankers on Wall Street. Perhaps some of the controversy surrounding Ben Bernanke comes from a lack of understanding concerning what the Federal Reserve actually does and what it is supposed to do. Somewhere, in the confusion of the financial regulatory mishaps of the past two years, we had to charge someone with being asleep at the switch. The collapse of our biggest financial institutions was so dramatic and, seemingly, sudden that we find it hard to believe that the powers that be didn't see it coming, particularly the Chairman of the Federal Reserve. How Time Chooses Their Person of the Year Even those that gave Bernanke the benefit of the doubt or those who credited him with saving the country from a true depression thought him a strange choice as Time's Person of the Year. After all, others were in the running. Others who might have been more deserving given the controversy surrounding Bernanke. But, Time magazine has a long and storied history of not just naming the "good guys" as their people of the year. After all, Joseph Stalin, a cruel Russian dictator, and the Ayatollah Khomeini, who overthrew the Shah of Iran in a bloody revolution, have been part of that group. That is not to say Bernanke is not one of the good guys. But, Time names all types. Their goal is to name a person or persons who, in their opinion, has had the most impact, positive or negative, during the year. The Structure and Functions of the Federal Reserve The Federal Reserve (Fed) has been a particularly visible body for some 30 years now with its hand on the wheel of monetary policy. It controls our interest rates, our money supply, our credit markets, and serves as a financial regulator of some, but not all, banks. But, even though the Federal Reserve has been more visible in recent years, it was created long ago by the Federal Reserve Act of 1913. Before that time, there had been some severe financial crisis's and bank panics in the U.S. and the Federal Reserve was created to insure the stability of the banking system. The Federal Reserve Act of 1913 created the Fed as an independent body operating within the U.S. government. The Fed has been accused of secrecy when, in reality, it doesn't have to disclose its actions to the President or the Congress. It is part of the system of financial checks and balances within our federal government. It is supposed to be a non-political body to the extent possible with the governors of the Fed serving long and staggered terms that cross Presidential terms. Congress does have oversight authority with regard to the Fed. One of the key functions of the Fed is to make sure that the banks in our financial system are liquid. The Fed has the legitimate power to act as a lender of last resort. In other words, the Fed has the power to extend credit to financial institutions in case of emergency. Not only does it have the power to take this action, it actually has responsibility since it is charged with maintaining the stability and integrity of our financial system. Some seem to think that Bernanke took it upon himself to infuse the large banks and bank holding companies with money to keep them from collapsing in the fall of 2008. In actuality, it was his responsibility to take some sort of action to maintain the liquidity of our financial system. Why is Ben Bernanke so Controversial? Another one of the responsibilities of the Fed is to prevent asset bubbles. One of the factors that precipitated the recession was the bubble in the housing market which led to inflated housing values. You can go back to 2000 and find the dot.com technology bubble. At that time, Alan Greenspan was the Chairman of the Fed and he was not able to prevent that collapse either. The Fed has not been very effective at the task of preventing asset bubbles. Very shortly before the collapse of the banks on Wall Street in 2008, Bernanke made the statement that the sub-prime lending crisis could be contained and that the underlying fundamentals of the economy were strong. He was proven wrong in short order. The Lack of Financial Regulation If blame is to be placed somewhere for the Great Recession, perhaps it should be placed at the feet of the easing of financial regulation rather than on an individual person. The Glass-Steagall Act, which required that the functions of commercial banks and investment banks be separated, was repealed in 1999. Simply put, banks that accepted customer deposits and made loans could then also sell stocks and conduct all the functions of underwriting. Many think that this led to increased risk-taking and speculation by commercial banks. If the fact that many of the "too big to fail" banks engaged in investing in exotic financial instruments rather than in solid, low risk investments, perhaps this is true. The Key Questions The key questions concerning Ben Bernanke are simply why didn't he see the dangers in the sub-prime lending crisis and in the housing bubble? Even the average American citizen knew housing prices were too high and that banks lending 125% of home equity seemed dangerous. When the confirmation of Ben Bernanke gets to the floor of the Senate, he may get confirmed but with more "no" votes than any Federal Reserve Chairman in the past. Instead of placing the blame where it lies, on the big banks who decided to gamble instead of protecting the public's money, many Senators seem determined to place the blame on Bernanke who simply did his job as the economy melted down before his eyes. ''' 'A list of vocabulary''' ____________________________________________________________________________________________ 'Prepare' for debates, using general instruction Debate Conduct the debate on the topic “Ben Bernanke is the controversial Chairman of the Fed” based on the article “Anatomy of a Meltdown”, the video “The Chairman” + 2 additional articles “'''Ben Bernanke: The Controversial Chairman of the Federal ' Reserve” (you`ll find it in the Project`s materials). The participants of the debate are: 1) ''Chairperson'' –to introduce the topic, outline some important facts/events linked to the person under consideration, conduct a smooth ball rolling engaging all the participants in this kind of activity; 2)'' '''Participants are divided into two teams: one team dispute Bernanke`s achievements, the other –are opponents of his policy focusing on B`s blunders & failures. All the participants should talk the talk (speak fluently & convincingly), be competent, draw on the key terms & collocations (no less than 10 terms). The participants take a full & active role in the debate, interact & cooperate with each other & with the host in a friendly way. Express your position, develop & comment on it, support, contradict, parry other participants` arguments & charges. Don`t dominate the discussion. Polite interruption is perfectly acceptable. '''T Time limit – 25 minutes.' Your performance will be assessed on the basis of: competence, confidence, fluency, contribution lexical resource grammar & pronunciation accuracy General Instruction Debate Rules A classroom debate is a discussion or structured contest about an issue or resolution (a formal expression of an opinion). A formal debate involves two sides: one supporting a resolution and one opposing it. The debate involves three groups: one supporting a resolution (affirmative team), one opposing the resolution (opposing or negative team), those who are judging the quality of the evidence and arguments and the performance in the debate (adjudicator) and may ask questions at the end of the debate, and the chairperson to introduce, conduct and keep time of the debate. The affirmative and opposing/negative teams usually consist of three members each, while the judging is done by the rest of the audience. The debate will take the form of timed individual and/or group presentations and responses. Prior to the beginning of the debate, both teams are to position their desks facing each other. Team members may speak either from their desks or from the podium, as they desire. Audiovisuals may be used at any time, including handouts, slides, audio and videotapes, etc. Team members are prohibited to speak to the audience or opposing team except at the times specially allocated to them. The team should observe debating etiquette. Conducting Debate The chairperson opens the debate by introducing and summarizing the moot (the topic to be debated). Then the affirmative team present their arguments, followed by a member of the negative team. This pattern is repeated for the second and the third speakers in each team. Finally, each team gets an opportunity for rebutting the arguments of the opponent. Speakers should speak clearly, audibly to an audience using some appropriate eye contact, variation of voice and body language. Speakers should find specific, relevant examples, statistics and evidence to support a given case. They should incorporate this information into their speech as part of a debate in a relevant and appropriate way, use a range of speaking skills to present a case during a debate. They should do so in an appropriate manner, demonstrating an understanding of the rules of formal debate. The judges (adjudicators) should be taking notes as the debate proceeds. The sequence for debate is as follows: · A 2- minute constructive speech from each speaker of both teams. (the second and the third speakers of both sides presenting further arguments, identifying further areas of conflict should answer the questions that may have been raised by the previous affirmative/negative speakers). · A 3-minute recess to prepare for rebuttals · 5-minute rebuttals from each side turn by turn. (At this stage you may either incorporate your questions in your speech during the first round or frame clear-cut counter arguments at the very beginning of the rebuttal stage) · A 3-minute concluding speech from each side · Questions from the audience (the audience can address questions to both sides after the debate. · The chairperson`s conclusive statements. · Adjudicators` votes NOTE: 'While referring to peers` or competitors` words/thoughts/ideas try to forget the ' '''verbs "say" & "tell". Instead use the following: ' '''assert state admit explain mention point out prove '' reply assure convince inform notify remind warn promise claim argue confirm that attack raise the question dwell upon emphasize that stress the importance ' ' add 'retort (резко возражать) deny TEAM ASSESSMENT At the end of each debate, the audience/adjudicators will decide by majority vote which team has developed and presented the best arguments. Only one team will win this debate. The audience will vote by secret ballot for a debate winner. Votes are to be based upon presentation quality only, not upon personal agreement or disagreement with the position espoused. When the debate is over, the number of votes for each team will be announced. Whichever team has more votes will be the winner, and will receive 5 bonus points in addition to the 20 for basic preparation. The winning team will: - have a solid background regarding all the materials - have plenty of evidence, vivid details, facts to back up claims - be creative, persuasive - use a great variety of rhetorical techniques as they drive their central points home - exude a level of passion and enthusiasm. This does not mean that one team must be right and the other one wrong. There are two sides to any debate, and either side could win. This is a list of features that adjudicators will look for: Matter: ''' · Subject knowledge · Relevance · Logical Reasoning '''Manner: · Personality · Persuasiveness · Language: new terms and relevant collocations · Stance / Gesture · Use of Notes ' Method:' · Speech Structure · I Introduction · Techniques · Strategy Teamwork · Compare teams as a whole · Collective presentation of case Continuity of argument Individual Assessment Your team doesn't have to win the debate for you to achieve a credit. You will be assessed on your own debating skills. If the debating skills of all three debaters are high enough they can all achieve credits, regardless of who won. This assignment is worth 20 points and is graded upon your ability to debate this issue and convince the judges while presenting your arguments employing proper vocabulary items and collocations from the researched materials with grammar accuracy. '''APPENDIX 1:'ETIQUETTE''' Like many similar activities, there are established forms of good behaviour in debating. While a speaker is speaking she or he has the floor and, unless debating in a Parliamentary style, should not be interrupted. This includes comments interjected by the audience or other speakers as well as disruptive behaviour from the other team or the audience. In order that fairness be protected speakers should sit down soon after their maximum time has expired. In some competitions a bell is rung continuously after the speaker is 30 seconds overtime but this should not be necessary. At the end of the debate the losing team's captain should stand and congratulate the winning team publically, thanking them for the debate. The winning team's captain should thank the other team, the debating officials (chairperson, timekeeper and adjudicator(s) ) and the audience. Both teams should then shake hands. It is considered poor sportsmanship to argue with the adjudicator about the result. ' APPENDIX 2:Chairperson`s terminology' A typical chairperson's presentation might go as follows: "Good morning ladies and gentlemen and welcome to today's debate. The topic for this debate is … For the affirmative this morning we have (team name) and for the negative we have (team name). Our adjudicator for this morning is the audience in the studio. "The speaking times will be (minimum speaking time) to (maximum speaking time). There will be a bell to signal the end of the alloted time the bell." "I would now like to call upon the first speaker of the affirmative (speaker's name) to open the debate." speech and adjudicator's nod "I would now like to call upon the first speaker of the negative (speaker's name) to open the case for the negative." in a similar manner throughout the debate the end of the debate "I would now like to call upon the adjudicators to give the decision on today's debate." this would be varied for different circumstances. APPENDIX 3:Information for participants Debating is not the same as giving a speech. When debating you will need public speaking skills, but you must also take account of these differences: You have opponents who will argue against what you are saying. ' · Anticipate (= think of in advance) what their arguments will be, and be prepared to rebut them. · Make sure your own arguments are well-supported, consistent and logical. ' You must be flexible. · A speech may be fully prepared, but in debating you must be ready to alter your planned statements to rebut your opponents or steer the debate in a way which suits your team. · You have to think on your feet. Some rule of debating allow your opponents to make 'points of information' in which they may ask a brief question or make a comment. You must be prepared to deal with these without getting flustered. You must work as a team. · The leader must apportion (divide up) the roles. · As well as researching and arguing their own case, each speaker should support the others and reinforce their arguments. You should practice appearing confident. · Public speaking needs confidence, but debating needs more., because you must relate to both your audience and the opposition, obey the Chairperson, and impress the adjudicators - and you may have to think up replies on the spur of the moment. · A lot of confidence is self-created. Many confident people started out feeling terrified, but if you appear confident then other people treat you as a confident person - which gives you confidence. It works! · These things make you look not confident: · Stuttering · Hiding your face by lowering your head or covering it with your hand · Giggling nervously · Awkward gestures such a biting your lip or rubbing your hands together · This is how to make yourself look more confident: · Even if you feel 'caught out', embarrassed, or your mind is a blank, make no reaction. · Fill in time while you think using 'fillers' such as 'Thank you, I was just coming to that.' or 'Yes, a lot of people seem to agree with that. But we don't accept it because...' · If you can think quickly and rebut your opponent's comment with a witty remark do so - but respond to the argument. Don't insult the speaker. Comments like 'Well, what would you know!' or 'That's the dumbest thing I've ever heard' are childish and lose you marks. APPENDIX 4:'Glossary ' APPENDIX 5:Signposting' May I begin by filling you in on the…/making a few observations about the events leading to that collapse/giving you an overview of/ bringing you up- to-date on … Then I `ll go on to highlight/throw some light on/talk you through/discuss in more depth/state I look at it this way The first thing I should say is/concerns… It has often been said that… You may be temped at first to suppose that… I put it to you (=suggest) In the course of his speech Mr Y mentioned/referred to… In his very able speech Mr X quoted statistics about.. First of all I`d like to explain Secondly } Let`s consider Lastly I must add that Last but not least Let`s not forget I now want to draw your attention to another fact On the other hand, some of us feel very strongly about… To begin with, I................... In the first line, I............. ' Other useful phrases for debates' ' - What can you say instead of "I think" ' I would say/think § In my opinion § To my mind § I am of the opinion that § I hold the opinion that § I suppose/assume/feel '- When you want to stress your "personal opinion":' § Personally I think § As far as I am concerned § As for me § As I take it § As far as I can see '- When you "agree" or when you "don't agree":' § I entirely/quite agree with you. § I agree to (with) her plan. § I am of the same opinion. § I should like to take up the argument of § I must contradict the ridiculous arguments of the previous speaker § I differ from/with you entirely. § I disagree with you: I am sure you're mistaken. § I stick to my opinion. § Let's agree to differ! '- When you want to say the "opposite" of what someone else 'said: § on the contrary! quite the contrary! just the opposite! § That is the very opposite of what I said. § That is quite the contrary to what I said. § I maintain the contrary. § In contrast to what you said, I maintain that........... '- When you are "quite sure" of something:' § of course! § That goes without saying (It goes without saying that......) § I contend/maintain that................ § It's my conviction that.................. ' - When you want to "ask a question":' § May I interrupt you? § There arises the question/point whether/if...... § This question raises the whole issue '- When you "haven't understood":' § I beg your pardon. / Pardon? § Could you repeat what you've just said? But slower, please./ § Could you slow down a bit? ' ''- If you should want to "correct a mistake":' § Excuse me (for interrupting) you should have said:"....." '- When you want to "distinguish" (make a distinction between) 'two aspects of a question, when you want to distinguish one aspect from the other: § on the one hand; on the other hand § in general; in particular § generally speaking § on the whole § taken as a whole § at first sight; on second thoughts '- When you want to "add" something:' § In addition,......................... § Moreover,.................... § Furthermore,........................ § Finally, § On top of that........................... - When you want to "emphasize" something: § I would like to lay (put) emphasis (stress) on the fact that.. § I just want to point out that................ '- When you want to "say the truth":' § To be frank (with you),................... § Frankly (speaking),......................... § To tell the truth, § To be perfectly frank,........................ § And if you are "not sure": § I don't know exactly. § I don't know for certain. '- General phrases:' § in other words; in this respect § to a certain degree/extent; It depends on your point of view in brief/short.......... view; in a nutshell To be brief,.................. To cut a long story short,...... Let me put it this way:.... § I don't know. - I don't know either. Nor/Neither do I. =Ways to open a debate= § We would like to introduce our stand by giving the following … § In order to effectively debate this topic, I would like to propose…. § By giving this…, a number of key issues arise from this problem which merit closer examination. § In the first place we would like to make clear that…. § The main argument focuses on…. =How to convince in a debate= § The opposition have tried to make some good points, however, they forgot to think about some very important issues, namely…. § We hear what the opposition are saying but we do not agree. We will prove to you… § That’s one way to think about it, however,…. § Not to play the Devil’s Advocate, but we will prove to you exactly the opposite. § The proposition’s motion may seem plausible at first glance, however, we as the opposition, would like to remind you of recent developments in this area. According to …. § At first sight, the proposition’s argument seems to be true. But…. § We have thought about the proposition’s proposal, however, research findings strongly support our motion of….. § The proposition unfortunately failed to reveal the truth of the matter,…. § It is easy enough to make broad generalisation about...like the opposition just did, but in reality it is a very complex issue. § The arguments presented by the proposition are by no means sufficient enough to back up the claim that…. § It is generally accepted these days that…. § It is only a matter of time until it becomes evident that the opposition’s stand must fall due to the following reasons…. § One must take into account that…. Possible conclusions § To conclude, we must emphasise our motion of…., hence the opposition’s point of view can no longer be supported. § To sum up, our motion must stand, simply because during the debate we have shown…. § This debate has made obvious that the opposition’s motion cannot stand since….. § The simple truth is… § The proposed arguments lead us to the irrefutable conclusion that… § To draw a line under this debate, … § After careful consideration, we must conclude that…. 17:45, August 29, 2013 (UTC)